Saturday, 18 August 2012

You are no longer the gatekeepers to content and you no longer
have a monopoly. Lobby if you like (and we know you do) but you’d be better off
coming to terms with it and adapting.

Let’s go
back to the difference between middlemen and gatekeepers: What are you bringing
to the table? If you’re adding something to the mix (distribution, promotion,
technical expertise, access to fans / artists etc. etc.) then you’re a
middleman. If all you’re doing is charging people to get to the table then
you’re a gatekeeper and, let’s not beat around the bush, you’re doomed.

Before
the advent of recorded media things were pretty simple. If you wanted to listen
to some music you either played it yourself, went somewhere where someone would
be playing it or (for the very rich) paid for someone to come to you and play
it.

There
were no movies of course, but the theatre was there and off you went.

The
gatekeepers were just that, the men on the gate and, in some cases, the booking
agents, but they were relatively few and far between. The middlemen were the
tavern landlords, the ticket sellers and the folks who stuck up the bills.

With the
advent of recorded media the game changed. Suddenly the option of bringing the
entertainment to you existed for everyone, not just the very rich. But
producing, distributing and advertising this content was expensive, very
expensive. It also took a long time and required a lot of very specialist
resource.

This
meant there quickly became a clear divide between the amateurs and the
industry-backed professionals, a divide that led to a massively successful set
of industries for about 50-odd years and an ever expanding set of restrictions
on what could be done with the output of these industries.

Towards
the end of the last century, along with the rise of the personal electronics
and the increasing availability of home computing, three things happened that
started an inexorable change for these industries:

1)
cheaper hardware and software brought media creation capability to the masses.
Prices have continued to fall and quality has continued to rise to levels
unimagined just twenty years previously. £1000 will buy you a brand new
computer, the recording software, a solid-top acoustic guitar and a condenser
microphone. With that you could record music that will surpass a lot of the
stuff from some of the professional studios of the seventies and 80s.

2) The
internet arrived and then, critically, morphed into web2.0, shifting from being
yet-another-mass-media-distribution- channel to being a true many-to-many
distribution mechanism for User Generated Content (UGC). In the music world
sites like myspace (RIP), cdbaby, last FM, bandcamp, soundcloud, thesixtyone
and many others sprang up to help artists distribute and advertise their work
directly to fans. Amazon, Lulu and others are providing the same service for
authors and crowd-funding tools like Kickstarter are offering aspiring
film-makers and game designers (see 3) the chance to make this shift as well.

3)
Computer games and consoles made the shift from the arcade and nerdiness to the
front room and mainstream acceptance. In a world where digital content is
effectively infinitely abundant, disposable income is still depressingly
finite. The music, movie and publishing industries have been forced to adapt to
a new competitor for these entertainment dollars and, in general, it’s a
competitor that is born of the digital revolution and is reacting to the
changing world more quickly and more profitably.

Content
will always be produced, fans will always exist but the gates are going or, in
some places, have gone entirely. There will always be a place for those who can
add value to the connection between fan and creator, but if your business model
exists solely to stand at the gate demanding admission then your ex-customer
will just walk over the ruins of the walls around you.

Or, to
go back to the original metaphor, the gravy train has stopped at the buffers,
the passengers and artists have disembarked and are mingling on the platforms
planning new journeys on new trains, cars, planes, bicycles and everything else
under the sun. How long are you going to sit in the carriage waiting for them
to come back?

Tuesday, 14 August 2012

If you charge western prices to the third world then people will find a way to get the content for free. 99c might not be a lot to readers of this blog but it’s a day’s wage to large amounts of the globe. The bad news is that you can’t stop a European going to an African website and buying from there, your unit cost is zero, expect your prices to trend that way.

This will be a short entry because it’s really just simple economics (even if it’s frequently missed by a great number of corporations who should know better).

Point 1: Once something is on the web it is effectively available everywhere. Sure you can try blocking things by regions and this will work for casual users and non-techy folks* but these things are easy to work around.
Point 2: Your unit cost is effectively zero**, everyone understands this, your unit price will have to be close to that for people to feel that they’re not being ripped off.
“Close to zero” is a variable though. In Western Europe or North America you can just about get away with 99c (or 99p) being “close to zero”. In the Far East, Eastern Europe, Russia, India and other areas of Asia, South America, anywhere in Africa, 99c gets ever further away from “close to zero” and ever closer to “a day’s wage”.
People will not pay a day’s wage for a digital entertainment file.

If you price your product that way then you can expect a high proportion of piracy in those countries. So you have two options: local pricing or acceptance that that market is not going to provide you with any income from digital downloads***.
However if you go for local pricing we get back to this “global market” thing. I have a friend who buys all his MP3s from a Russian site. It’s all completely legit (as far as he’s aware), but only a 10 th of the price. No laws broken, no copyright infringed, 1/10th the outlay.

But maybe 10 times the risk?
I’ve never used this site for two reasons:
1) I’m not comfortable giving my credit card details to a Russian website.
2) I’m not convinced that any of that money will ever make it back to the original artist.

And those two reasons mean a business opportunity still exists.
Let’s face it, a lot of the countries that have the lowest standards of living are also rife with corruption, if you run a trusted, 1st world web-company then that alone will be reason for some people to buy (see Amazon and iTunes for examples).
Secondly the success of things like Kickstarter, NoiseTrade and Bandcamp shows that there are a lot of customers out there who want to support the artist.
If you can facilitate that, show that you’re helping to get that content made, and provide a trustworthy service, then there’s a place for you.

* Warning, non-techy folks are a decreasing proportion of the population, building your business model on them is not a long-term strategy.
** I know that there are hosting and management costs for large businesses, but those large businesses are shifting lots of units.
*** It could still provide you with income from other channels though, don’t write it off.